The Importance Of Asset Allocation

Relevance of Various Asset Classes

What is asset allocation? Asset allocation is an investment strategy that seeks to strike a balance between risk and reward by allocating a portfolio’s assets according to a person’s objectives, risk tolerance and investment horizon. Equities, debt, gold and real estate are among the basic asset classes. Each of these asset classes offer a varied level of risk and return and react differently to any economic event. Through diversification across asset classes, asset allocation helps reduce an investor’s overall portfolio risk.